California Does it Again: Groundbreaking Energy Storage Initiative

Much like the California Solar Initiative created a market for rooftop solar and is now driving rapid declines in the cost of rooftop solar across the nation, this mandate will create a market for storage that is expected to, in the words of CPUC President Michael Peevey "tear down barriers that prevent cost-effective energy storage resources from competing and providing benefits to California customers, ratepayers of California utilities."

Why is this ground-breaking? The sun doesn't always shine. Maybe you knew that already. This is a point routinely mentioned at the top of the list of challenges for wider deployment of clean energy (and too often blown way out of proportion by fossil fuel interests). But what's a state like California to do when it has clear goals to reduce carbon pollution from fossil fuels and scale up clean energy resources like wind and solar?

The challenge utilities confront with these clean resources is that, while highly predictable, they are nonetheless variable. In other words, we trust that every morning the sun rises in the east, sets in the west, and in California, provides dependable sunlight for the time in between. But, it is nonetheless variable in that the sun doesn't shine 24 hours a day. Grid operators balance lots of different energy generators simultaneously and throughout the day, of course, because we don't depend on one single location for energy generation. Nevertheless, a persistent question for power operators has been how to plug those gaps when the sun isn't shining.

Until now, the answer has been to build large and dirty natural gas plants. These natural gas plants "firm" the power being supplied by clean energy. "Firm" is utility-speak for filling the gaps in a solar project's power production as a cloud passes overhead or the sun sets. Essentially, the modern gas plant functions in similar ways as a battery, just with an asthma causing, carbon spewing smokestack on top.

It's not really a secret at this point that the easiest way for a natural gas developer to get approval for a gas plant is to cite the need to balance the grid as more clean energy projects are built. The problem, again, is that while these plants do the trick from an engineering or grid operations perspective, they sure cost a lot of money1 and they're dirty. Additionally, the benefit of building clean energy also shrinks if it’s facilitating new and dirty natural gas projects.

This issue came to a head earlier this year when the CPUC postponed a decision on approving a new natural gas plant just outside San Diego. During the Commissioners’ comments that day, Commissioner Florio urged all parties to come together quickly to develop alternatives to natural gas plants. Florio explained "every member of this panel is a strong supporter of AB 32... We have to face reality. I strongly support San Diego's implementation of solar, but the sun sets every night. Energy drops off faster, and we need something to balance it." So, the question is, how can we seamlessly integrate huge amounts of clean energy onto the grid without making people sick or digging a deeper hole on climate change?

What's perfect about the timing of the decision is that this new policy unfolds just as the state is weighing its options regarding the San Onofre Nuclear Generating Station. With the massive, 2,250 megawatt nuclear plant now retired, Southern California Edison (SCE) and San Diego Gas & Electric (SDG&E) have both requested another 500 MW of new natural gas. The CPUC storage decision, which guides SCE and SDG&E to purchase a combined 745 MW of storage, can help ensure that a smart combination of energy storage and local clean energy can cost-effectively eliminate the need for new natural gas plants.

A huge amount of credit goes to CPUC Commissioners like Carla Peterman, who oversaw the proceeding and ultimate decision. Utilities pushed hard in testimony to turn a requirement to build storage into an optional goal, but were turned back by the Commission and advocates from Earthjustice (who represented the Sierra Club) and the California Environmental Justice Alliance.

This is a game-changer in so many ways. It's impossible to justify the construction of any new natural gas project when cost-effective, clean alternatives exist. Technology and innovation, coupled with smart policy, are changing the game and put California at the cusp of rendering fossil fuel plants obsolete. Think about that. With storage and clean energy now being built together, the endgame of a truly clean, modern electric system, completely free of fossil fuels, is within reach. Amazing.

1- Take, for example, SDG&E's proposal to build the Pio Pico project, which was estimated to cost $1.5 billion and was only 300MW. To give you a sense of scale, on a hot summer day, the state can require more than 50,000MW of power at any moment.

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